This article is from the Australian Property Journal archive
PROPERTY resales recorded a median profit of $285,000 in the June quarter, hitting a high not seen since the early 90s, however a majority of Sydney and Melbourne apartments were resold at a loss.
According to CoreLogic’s Pain & Gain report for Q2 2024, across the 91,000 analysed resales 94.5% of transactions recorded a nominal gain. Over the quarter, nominal gains from resales totalled $31.8 billion, up 7.7% from the previous quarter. The record gains reflect new highs for national housing values hit each month since last November.
“It also reflects sellers largely being empowered to time their resale for profit, given relatively stable conditions for mortgage serviceability,” said Eliza Owen, head of research at CoreLogic.
The rate of profit-making sales in the regions, at 95.7%, remained higher than the capital city rate, at 93.8%, in the June quarter.
Brisbane was the most profitable resale market over the June quarter, with a profit-making sales rate of 99.1%, followed by Adelaide at 98.7%, Perth at 95.4%.
“The profitability across Brisbane, Adelaide and Perth reflects strong capital growth trends in recent years, which is also contributing to lower hold periods for profit- making sales,” added Owen.
With Sydney’s profit-making resale rate up to 92.0% for the quarter and Melbourne’s fell by 30 basis points to 90.5%.
“However, the housing market faces some headwinds to demand in the form of high interest rates that are ‘higher-for-longer’, high cost of living and constrained affordability,” said Owen.
“Combined with what is looking like a robust spring selling season, the depth of buyer demand to deliver higher and higher profits may be tested in the coming months.”
At the same time, the median of losses from resale rate across the country was at -$40,000, with a median proportional loss of -6.8%, totalling $282 million, up 2.5% from $275 million in the March quarter.
The majority of loss-making resales were unit sales, at 66.3%, with 70.6% of these in Melbourne and Sydney. With Sydney and Melbourne making up almost half of all loss-making sales in the quarter, at 46.8%.
Houses were broadly more profitable than units throughout the period, at a profit-making sales rate of 97.2%, on units’ 89.4%.
With loss-making sales for houses at just 2.8% nationally, compared to 10.6% for units.
“Not only were units around four times more likely to make a loss from resale than houses, but the median nominal gain from house resales was almost twice as large as that of units,” said Owen.
“At a high level the outlook for unit owners looks promising, with unit profitability expected to improve in the short term. Demand for units may increase in the coming months, as buyer demand pivots from the relatively expensive detached house sector.”
The median hold period was stable across the quarter, at 8.8 years, which puts the median initial purchase dare around the September quarter of 2015.
Over this 8.8-year period, national home values have ballooned by 56.0%, with only Darwin recording a decline over this period, at 1.6%.
